Backdoor Roth and Accrued Interest in Traditional IRA
Hey all!
I know this has been discussed previously but would just like to verify.
For the past two years, my MAGI was such that a backdoor Roth IRA was necessitated. While executing the process, the funds accrued a small about of interest while sitting in my Traditional IRA just prior to converting to Roth IRA. I currently have just over $3 in the Traditional IRA and would like to execute a backdoor Roth IRA contribution for 2026.
What is the best way to execute this process and avoid any risk of pro rata taxation for the $7500 backdoor Roth? Should I convert the $3 to the Roth prior to contributing the $7500 into my traditional? Should I contribute the $7500 and convert it all at once to the Roth? Does it even matter? I understand I will be subject to taxation on the $3 interest sitting in the traditional, which is negligible really.
Thanks!